GST reforms to strengthen consumption growth drivers: RBI bulletin

The landmark GST reforms should progressively result in a sustained positive impact through significant gains in ease of doing business, lower retail prices and strengthening of consumption growth drivers, the RBI said in its September bulletin released on Wednesday. 

The decisions of the GST Council in its September 3 meeting set in motion major structural reforms in the GST regime, simplifying rates and processes, the central bank said in its bulletin.

The new framework is designed to balance the needs of the common man with ease of administration. Most of the essential items now attract either nil or 5 per cent GST.

"Beyond rate simplification, the reforms also tackle challenges relating to the inverted duty structure. Processes have also been made business-friendly: simpler registration and return filing, faster refunds, and lower compliance costs – particularly benefiting micro, small and medium enterprises and startups. Overall, these reforms are expected to boost tax buoyancy, improve compliance, and contribute to greater ease of living as well as ease of doing business," the RBI bulletin states.

The RBI also said that the production and sales of passenger vehicles are likely to pick up in the upcoming festive season, supported by the GST rate cut.

Global uncertainty remained elevated in the wake of the imposition of US trade tariffs on major trading partners and renewed concerns over the fiscal health of advanced economies. The Indian economy exhibited marked resilience as evident from the five-quarter high growth during Q1:2025-26, propelled by domestic drivers, the RBI bulletin observed.

It also highlighted the strong fundamentals of the Indian economy. CPI headline inflation edged up but remained well below the target rate for the seventh consecutive month. System liquidity remained in surplus, facilitating the pass-through of policy rate cuts. India’s current account deficit moderated in the April-June quarter (Q1) of the current financial year Q1 over last year, supported by robust services exports and strong remittances receipts, it pointed out.

Indian equity markets witnessed bidirectional movements during August-September, the bulletin added.

Picture Courtesy: IANS